Gong Ting: “Make America great again” key to Trump’s 1st State of the Union address

CIIS Time:03 05, 2018 Writer:Gong Ting Editor:Wang Jiapei

In his first State of the Union Address after one year in office, the vital goal of making America great again seems to be not just what Donald Trump promised in his campaign, but the visible progress his presidency has already achieved in a chaotic and controversial year. Much of his audience's attention was directed to a summary and review of a series of results, including but not limited to the creation of new jobs, a 45-year low unemployment rate, relief for the middle class and small businesses as a result of his tax reform plan, revival of manufacturing sector at home, repatriation of capital from abroad, etc.

The most important pillar of Trump’s domestic agenda is tax reform. Although whether the plan will worsen the national debt is still under debate, it will produce a series of positive and far-reaching effects in several approaches. A reduction in the income tax rate will save costs for households and enterprises and therefore stimulate domestic consumption. The focus on the reduction of the cross-border income tax rate will encourage American enterprises operating overseas to bring capital and profits back home, and along with capital inflows, will also bring real manufacturing jobs back to America. The case of Apple’s recent announcement of investing a total of 350 billion US dollars and hiring another 20,000 workers in America is the immediate highlight.

The other most significant pillar of his agenda of making America great again is Trump’s American First trade policy. In his words, trading relationships need to be fair and reciprocal, and therefore old trade deals need to be fixed and new ones negotiated. America’s trade deficit, especially the deficit in goods, with the rest of the world has remained stubbornly high for several decades. Although the reason behind the unprecedentedly high trade deficit is complex, Trump thinks that America has problems with countries that are good and competent at manufacturing. However, America’s hawkish stance of abusing trade remedy measures, starting since Trump’s inauguration, as well as rising fears of a so-called trade war, will not only hurt American customers by raising living costs, but also affect American companies at home positioned upstream/downstream of the value chain in related sectors. It must be said that the other side of the coin is that America has also a tremendous trade surplus in services with most parts of the world, and that it conducts firm export control measures in high-tech products to countries including China. The trading relationship between America and other countries, including China, is too interdependent to survive tit-for-tat measures.

In his address, Trump also described China and Russia as “rivals” that challenge American interests. Repeating the political rhetoric is one of the useful ways to divert contradictions and attentions of audiences at home. Creating enemies in an imaginary approach is easy and convenient, but reflecting on its own and looking inside to find out the root of problems is rather not. In a world of increasing inter-dependence and interconnectedness, such a cold-war mindset is not in the interests of either side.

Gong Ting is an assistant research fellow at the China Institute of International Studies.